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Elizabeth Warren says the new Consumer Financial Protection Bureau will be 'a little government agency'

May 27, 2011 | 10:40
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To most congressional Republicans, the new Consumer Financial Protection Bureau is a monstrous government creation, with a huge budget, overly broad mandate and a structure unaccountable to taxpayers.

To Elizabeth Warren, the Obama administration advisor helping launch the bureau, it's just "a little government agency" with a big mission.

"This little government agency has the opportunity to make consumer financial markets work better for families, better for responsible lenders, and better for the economy as a whole," Warren said in prepared remarks for a commencement address Friday at the Rutgers School of Law in Newark, N.J. "This agency is built on the faith that when the rules are fair, when anyone can see prices and risks up front and when fine print can't be used to hide nasty surprises, then we have the chance to build stronger families and a stronger America."

Warren, a Harvard University law professor who headed a key bailout watchdog panel before joining the administration, has become a bit of a celebrity since the financial crisis.

An outspoken consumer advocate who warned for years about the increasing debt of consumers, she's appeared on "The Daily Show with Jon Stewart" and other TV forums. Liberals rallied to have President Obama nominate her as the consumer bureau's first director, and Democrats in Massachusetts are urging her to run for the U.S. Senate next year against incumbent Republican Scott Brown.

On Friday, she returned to Rutgers, where she received her law degree in 1976. She reminded the graduates that they had entered law school in September 2008 when the financial system "came crashing down."

Now, as the new agency designed to protect consumers in the financial marketplace prepares to begin operations in July, Warren said the country was at a crossroads.

"Some people are satisfied with the idea that the world has changed and now it is simply a more dangerous place, with a few big-time winners and all the rest of us left hanging around the margins, hoping for the best and fearing the worst," she said in her commencement address. "Others see it differently. We believe that change is possible and that, working together, we can do better -- better for ourselves and better for our country."

Republicans haven't been too impressed with Warren or the new bureau. . . .

The House Financial Services Committee recently voted to limit the power of the agency. Nearly all Senate Republicans have vowed to block the nomination of Warren or anyone else to head the agency unless similar changes were made to its structure.

And during a hearing on the new consumer agency Tuesday, Warren and Rep. Patrick McHenry (R-N.C.), chairman of a House oversight subcommittee, clashed sharply on everything from the size of the agency's budget to how much time Warren had agreed to testify.

McHenry said the financial reform law enacted last year "has granted the bureau an unparalleled budgetary authority, free from congressional authorization and an unacceptable degree of autonomy hidden from congressional oversight."

The bureau's budget will be funded directly from the Federal Reserve, outside the congressional appropriations process. The annual budget can go as high as $600 million, although the bureau's projections are for a $329-million budget in 2012, with about 1,200 employees.

Warren has argued that all other financial regulators, including the Federal Deposit Insurance Corp. and the Office of Comptroller of the Currency, are funded outside the appropriations process. The FDIC, for example, had a 2010 budget of about $4 billion and 8,150 employees.

When pressed by McHenry as to whether she'd accept a temporary recess appointment by Obama to be the bureau's director, Warren evaded the question. But her unusual clash with McHenry showed she might be sharpening her political skills for a run for the Senate seat.

A hint of that might be found in her Rutgers commencement address.

She told the graduates they could "play a meaningful role in this country's future" and then went on to describe how. She said they could practice law, teach, write, run a business.